(Bloomberg) Boaz Schwartz, Deutsche Bank AG’s chief executive officer in Israel, was detained over alleged value-added-tax violations involving the company’s clients, the latest setback in the German firm’s attempts to end years of legal issues and misconduct.

Schwartz, suspected of misreporting 550 million shekels ($146 million) of transactions, was detained Tuesday, a day after tax authorities raided the bank’s local offices, seizing executives’ laptops and mobile phones, according to a statement from the Israel Tax Authority. He was freed under condition by Judge Karen Miller of the Jerusalem Magistrate’s Court.

The transactions, which began in 2011, were reported as if conducted by foreign residents, avoiding the 17 percent VAT that Israelis must pay, the tax authority said. Deutsche Bank said it’s cooperating with the investigation and that it acts in accordance with the law and strict legal advice, both in Israel and abroad.

The arrest is the latest scandal to beset the lender struggling to settle lawsuits and rebuild confidence after misconduct costs helped tip Frankfurt-based Deutsche Bank into two years of losses. Legal cases that date back many years cost the company “reputation and trust” in addition to about 5 billion euros ($5.4 billion) since John Cryan took over as chief executive officer in July 2015, the CEO said in an advertisement in German newspapers this weekend, blaming the “misconduct of a few” employees for the transgressions.

Israel Revenue

Deutsche Bank had 9 million euros of revenue in Israel in 2015, which produced a pretax profit of 5 million euros, according to the lender’s annual report. The firm employed 11 workers in the country at the end of 2015, the report shows.

Schwartz joined Deutsche Bank in 1997 to establish the corporate finance practice in Israel, according to a biography provided by the bank. He holds an MBA from Wharton and PhD in Finance from the Booth School of Business at Chicago University, according to his LinkedIn profile.

Tax evasion allegations have beset Israel’s largest banks in recent years, forcing lenders including Bank Hapoalim Ltd and rival Bank Leumi Le-Israel Ltd to pay millions of dollars in fines to authorities after accusations they helped U.S. clients evade taxes.

Practical Tools

Ilan Ben-Eli, founder and group leader of Beneli Tax Boutique in Tel Aviv, an affiliate of Andersen Tax, said the Israel Tax Authority “should consider providing sharp and practical tools so taxpayers can decide if VAT should be charged or not.”

Authorities will now need to go through the seized computers and phones to determine the evidence, and it could be months before any indictment is handed down, if at all, according to Guy Flanter, a former state prosecutor who now specializes in white-collar defense. The country has taken a much stricter approach to money laundering and tax evasion in recent years, he said in a telephone interview.

—Dale Crofts and Michael S. Arnold, with assistance from Donal Griffin and Yaacov Benmeleh

Bloomberg News